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The impact of highways on commodity prices: The price of butter in Japan

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  • Hayakawa, Kazunobu
  • Tsubota, Kenmei

Abstract

This study empirically investigates the effect of highway construction on retail prices of butter in Japan. We consider the relocation of butter producers owing to the development of highways. We observed that highway construction increased transportation speed; however, the average transportation time from the production site dramatically increased with the increase in transportation distance. This was because of the concentration of butter factories in limited regions. Consequently, on average, the increase in transportation time during 1966–1980 raised the price of butter by 3.3 %. Furthermore, while the increase in speed reduced the price by 2 %, the increase in transportation distance increased the price by 5.3 %.

Suggested Citation

  • Hayakawa, Kazunobu & Tsubota, Kenmei, 2022. "The impact of highways on commodity prices: The price of butter in Japan," Journal of Asian Economics, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:asieco:v:81:y:2022:i:c:s1049007822000604
    DOI: 10.1016/j.asieco.2022.101503
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    More about this item

    Keywords

    Highways; Japan; Transportation time; Proximity-concentration trade-off;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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